At 02.57 hours on 2 June 1942 the unescorted Knoxville City (Master George P. Shanahan) was torpedoed by U-158 about 50 miles southeast of Cape Corrientes, Cuba, while steaming a zigzag course at 10 knots after being dispersed from a convoy. One torpedo struck on the starboard side in the engine room, 20 feet below the waterline. The explosion killed two men on watch below, stopped the engines immediately, caused the boilers to explode, destroyed both starboard lifeboats and carried away the radio antenna. A distress signal was sent with the emergency radio, but no answer was received. After five minutes, most of the nine officers, 28 crewmen, 14 armed guards (the ship was armed with one 5in, four 20mm and two .30cal guns) and four passengers abandoned ship within 20 minutes in the two remaining lifeboats. One hour later, a coup de grâce hit the vessel, which sank ten minutes later.

The Brazilian merchant Jamaica offered to take the survivors to New Orleans, but they declined the offer because she was dimly lit and they thought the U-boat might still be nearby. 48 hours after the attack, the survivors made landfall at La Calina, Cuba with the help of the Cuban gunboat Donativo.